The governments of Manitoba and Ontario have decided to proceed with a detailed technical study on the Clean Energy Transfer Initiative (CETI), a proposed hydroelectric power project in Northern Manitoba and a transmission line which would bring power from Manitoba to Ontario. The technical study would include detailed engineering and cost analysis, further discussions with First Nations, as well as a more detailed analysis on overall project economics.

"This project has potential benefits for both provinces, and that's why we are moving forward to the next phase," said Ontario Energy Minister Dwight Duncan. "Clean energy from Manitoba has the potential to provide Ontarians with 1,500 megawatts of clean, renewable and reliable hydroelectric power, enough to power one million homes in Ontario."

Manitoba Minister of Energy, Science and Technology Tim Sale observed that the Clean Energy Transfer would "contribute to meeting our national climate change targets by helping to displace fossil fuel generation and creating significant economic development opportunities for First Nations and northern communities."

The decision is based on the results of a feasibility study commissioned by both governments in 2003. Manitoba has a potential excess of energy supply capacity over and above its domestic needs, including approximately 5,000 megawatts (MW) of potential new generation hydro sites which could be developed economically and with minimal environmental impact.

The multi-billion dollar project would require the development of hydroelectric sites in northern Manitoba, and the construction of a transmission line to central Ontario, where it would connect with the province's existing transmission grid.

The recently-released results of the feasibility study indicate that the CETI offers potential benefits for Canada as a whole, in addition to the two provinces. The analysis conducted so far indicates that the project would reduce greenhouse gas (GHG) emissions by at least seven million tonnes annually by helping Ontario achieve its goal of phasing out coal-fired generation. As Canada's largest single CO2 reduction project, it would also help the federal government meet some of its Kyoto Protocol obligations, in addition to reducing emissions of SOX, NOX, mercury and particulates, says the report.

Economically, the project would generate an estimated $5.6 billion in gross domestic product (GDP) and some $1.6 billion in tax revenues across all levels of government, plus 85,000 person-years of direct and indirect employment nationwide. Many of these employment and business opportunities would accrue to Ontario and Manitoba, particularly in northern and First Nations communities.

The study team estimated the levelized unit energy cost (LUEC) of the CETI project at between $67 and $78 per megawatt-hour (MWh) before environmental credits. This is comparable to the most likely alternative new supply source, the combined-cycle gas turbine, with a LUEC of $65 to $78/MWh, without considering environmental costs. Assuming the CETI project displaces existing coal-fired generation in Ontario, the increased environmental benefits would bring the project's net LUEC down to $42 to $53/MWh, says the report.

Given the environmental and economic benefits, the report recommends that the federal government become more active in the process, in particular with regard to streamlining the environmental and economic approval and regulatory processes which currently could stretch out over four or five years, delaying the potential delivery of power from the CETI. The proposed Manitoba-Ontario energy transfer could also be a first step in the development of a national East-West electricity grid, which would also improve reliability and provide greater national energy security.